1
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM 8-K
ON
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): FEBRUARY 25, 2000
NEWFIELD EXPLORATION COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-12534 72-1133047
(State or other jurisdiction (Commission file (I.R.S. employer
of incorporation or organization) number) identification number)
363 N. Sam Houston Parkway E.
Suite 2020
Houston, Texas 77060
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (281) 847-6000
==============================================================================
2
Item 2. Acquisition or Disposition of Assets
On February 25, 2000, Newfield Exploration Company (the "Company")
acquired interests in three producing gas fields in South Texas (the
"Acquired Interests") from Headington Oil Company, L.P. for a cash purchase
price of $141.4 million. The effective date of the transaction is
January 1, 2000.
The acquired properties are located in Hidalgo, Brooks and Kenedy
Counties. About 90% of the acquired proved reserves are natural gas. The
three fields are currently producing about 75 million cubic feet equivalent
per day ("MMcfe/d") gross, or 35 MMcfe/d net to the Company. The Company
will operate two of the three fields.
The properties currently have relatively low unit of production lease
operating expenses, less than $0.20 per thousand cubic feet equivalent of
gas, including production taxes. The Company has identified drilling
opportunities on the acquired acreage and expects to drill 10-12 wells over
the next 24 months.
The Company expects the acquisition to add about 10 billion cubic feet
equivalent ("Bcfe") to production volumes for 2000, bringing estimated
production for the year to about 139 Bcfe, an increase of more than 20
percent over 1999.
The acquisition was funded with working capital and borrowings under
the Company's revolving credit facility. The Company estimates its remaining
borrowing capacity at about $90 million.
Certain of the statements set forth in this Report regarding planned
drilling activities and estimated production volumes are forward looking and
are based upon assumptions and anticipated results that are subject to
numerous uncertainties. Actual activities and production volumes may vary
significantly from those anticipated due to many factors, including drilling
results, oil and gas prices, industry conditions, the prices of good and
services, the availability of drilling rigs and other support services and the
availability of capital resources. In addition, the drilling of oil and gas
wells and the production of hydrocarbons are subject to governmental
regulations and operating risks.
3
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
See "Index to Financial Statements - Financial Statements of the
Acquired Properties" on page F-1.
(b) Pro Forma Financial Information.
See "Index to Financial Statements - Unaudited Pro Forma Combined
Financial Statements" on page F-1.
(c) Exhibits.
None.
4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEWFIELD EXPLORATION COMPANY
Date: May 5, 2000 By: /s/ Terry W. Rathert
-----------------------------------
Terry W. Rathert
Vice President, Chief Financial
Officer and Secretary
(Authorized Officer and Principal
Financial Officer)
5
INDEX TO FINANCIAL STATEMENTS
Financial Statements of the Acquired Properties:
Page
----
Report of Independent Accountants . . . . . . . . . . . . . . . . . F-2
Statement of Revenues and Direct Operating Expenses of the
Acquired Properties for the Year Ended December 31, 1999. . . . . F-3
Notes to the Statement of Revenues and Direct Operating Expenses. . F-4
Supplementary Oil and Gas Disclosures for the Acquired
Properties (Unaudited). . . . . . . . . . . . . . . . . . . . . . F-5
Pro Forma Combined Financial Statements as of and for the year
ended December 31, 1999 (Unaudited) . . . . . . . . . . . . . . . F-7
Pro Forma Combined Supplementary Oil and Gas Disclosures as of
December 31, 1999 (Unaudited) . . . . . . . . . . . . . . . . . . F-11
F-1
6
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of Newfield Exploration Company:
We have audited the accompanying statement of revenues and direct operating
expenses of the Acquired Properties for the year ended December 31, 1999.
This financial statement is the responsibility of management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying financial statement reflects the revenues and direct operating
expenses of the Acquired Properties as described in Note 2 and is not intended
to be a complete presentation of the financial position, results of operations
or cashflows of the Acquired Properties.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenues and direct operating expenses of the
Acquired Properties as described in Note 2 for the year ended December 31,
1999, in conformity with generally accepted accounting principles.
/s/ PRICEWATERHOUSECOOPERS
Houston, Texas
April 28, 2000
F-2
7
THE ACQUIRED PROPERTIES
STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
(In thousands of dollars)
Year Ended
December 31, 1999
-----------------
Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $29,444
Direct operating expenses . . . . . . . . . . . . . . . . . . . . (3,998)
-------
Excess of revenues over direct operating expenses . . . . . . . . $25,446
=======
The accompanying notes are an integral part of this financial statement.
F-3
8
THE ACQUIRED PROPERTIES
NOTES TO THE STATEMENT OF
REVENUES AND DIRECT OPERATING EXPENSES
1. THE PROPERTIES
On February 4, 2000, Newfield Exploration Company (the "Company") entered
into an agreement with Headington Oil Company, L.P. and affiliated entities
("Headington") to purchase interests in 3 producing fields located in South
Texas (the "Acquired Properties"). The purchase price, subject to adjustment
for production from January 1, 2000 through February 25, 2000, was
approximately $142 million in cash. The transaction closed on February 25,
2000.
2. BASIS OF PRESENTATION
The statement of revenues and direct operating expenses has been derived from
Headington's historical financial records. Revenues and direct operating
expenses included in the accompanying statement represent the Company's
acquired interest in the Acquired Properties and are prepared on the accrual
basis of accounting. During the period presented, the Acquired Properties
were not accounted for as a separate division by Headington and therefore
certain costs, such as depreciation, depletion and amortization, general and
administrative expenses and corporate income taxes were not allocated to the
individual properties. Full separate financial statements prepared in
accordance with generally accepted accounting principles are not presented
because the information necessary to prepare such statements is neither readily
available on an individual property basis nor practicable to obtain in these
circumstances. The results set forth in this financial statement may not be
representative of future operations.
F-4
9
THE ACQUIRED PROPERTIES
SUPPLEMENTARY OIL AND GAS DISCLOSURES (Unaudited)
Oil and Gas Reserve Quantities
The following oil and gas reserve information was prepared by the Company
based on studies performed by its petroleum engineering staff using
information supplied by Headington. The following table presents the
estimated remaining net proved and proved developed oil and gas reserves
attributable to the Acquired Properties at December 31, 1999, along with a
summary of changes in the quantities of net remaining proved reserves during
the year.
Proved reserves are estimated quantities of crude oil and natural gas that
geological and engineering data demonstrate with reasonable certainty to be
recoverable in future years from known reservoirs under existing economic and
operating conditions. Proved developed reserves are proved reserves that can
be expected to be recovered through existing wells with existing equipment
and operating methods.
Estimated Net Quantities of Oil and Gas Reserves Attributed to the Acquired
Properties
Crude Oil Natural Gas
(MBbl) (MMcf)
--------- -----------
Proved developed and undeveloped reserves:
January 1, 1999. . . . . . . . . . . . . . . 1,639 118,576
Production . . . . . . . . . . . . . . . . (191) (13,910)
----- -------
December 31, 1999. . . . . . . . . . . . . . 1,448 104,666
===== =======
Proved developed reserves:
January 1, 1999. . . . . . . . . . . . . . . 937 62,783
December 31, 1999. . . . . . . . . . . . . . 746 48,873
Standardized Measures of Discounted Future Net Cash Flows Relating to Proved
Oil and Gas Reserves
The following information has been developed utilizing procedures prescribed
by Statement of Financial Accounting Standards No. 69 "Disclosures about Oil
and Gas Producing Activities" ("FAS 69") and based on natural gas and crude
oil reserve and production volumes estimated by the Company's petroleum
engineering staff. It may be useful for certain comparative purposes, but
should not be solely relied upon in evaluating the Acquired Properties or
their performance. Further, information contained in the following table
should not be considered as representative of realistic assessments of future
cash flows, nor should the Standardized Measure of Discounted Future Net Cash
Flows be viewed as representative of the current value of the Acquired
Properties.
The Company believes that the following factors should be taken into account
in reviewing the following information: (1) future costs and selling prices
will probably differ from those required to be used in these calculations;
(2) due to future market conditions and governmental regulations, actual
rates of production achieved in future years may vary significantly from the
rate of production assumed in the calculations; (3) a 10% discount rate may
not be reasonable as a measure of the relative risk inherent in realizing
future net oil and gas revenues; and (4) future net revenues may be subject
to different rates of income taxation.
F-5
10
THE ACQUIRED PROPERTIES
SUPPLEMENTARY OIL AND GAS DISCLOSURES (Unaudited)
(Continued)
Under the Standardized Measure, future cash inflows were estimated by
applying year-end oil and natural gas prices to the estimated future
production of period-end proved reserves. Future cash inflows were reduced
by estimated future development, abandonment and production costs based on
year-end costs in order to arrive at net cash flow before tax. Future income
tax expense has been computed by applying year-end statutory tax rates to
aggregate future pre-tax net cash flows, reduced by the tax basis of the
properties involved. Use of a 10% discount rate is required by SFAS No. 69.
Management does not rely solely upon the following information in making
investment and operating decisions. Such decisions are based upon a wide
range of factors, including estimates of probable as well as proved reserves
and varying price and cost assumptions considered more representative of a
range of possible economic conditions that may be anticipated.
The Standardized Measure of Discounted Future Net Cash Flows Relating to
Proved Oil and Gas Reserves attributed to the Acquired Properties is as
follows:
Year Ended
December 31, 1999
-----------------
(in thousands)
Future cash inflows. . . . . . . . . . . . . . . . . . . . . $287,532
Less related future:
Production costs. . . . . . . . . . . . . . . . . . . . . (27,024)
Development and abandonment costs . . . . . . . . . . . . (33,483)
---------
Future net cash flows before income taxes. . . . . . . . . . 227,025
10% annual discount for estimated timing of cash flows . . . (76,775)
---------
Standardized measure of discounted future net cash
flows before income taxes. . . . . . . . . . . . . . . . . . 150,250
Future income tax expense, net of 10% annual discount. . . . (19,695)
---------
Standardized measure of discounted future net cash flows . . $ 130,555
=========
A summary of the changes in standardized measure of discounted future net
cash flows relating to proved oil and gas reserves attributed to the Acquired
Properties is as follows:
Year Ended
December 31, 1999
-----------------
(in thousands)
January 1, 1999. . . . . . . . . . . . . . . . . . . . . . . $123,401
Revisions of previous estimates:
Changes in prices and costs. . . . . . . . . . . . . . . . 21,319
Accretion of discount. . . . . . . . . . . . . . . . . . . 13,924
Sales of oil and gas, net of production costs. . . . . . . (25,446)
Net change in income taxes . . . . . . . . . . . . . . . . (2,643)
--------
Net increase . . . . . . . . . . . . . . . . . . . . . . . . 7,154
--------
December 31, 1999. . . . . . . . . . . . . . . . . . . . . . $ 130,555
========
F-6
11
NEWFIELD EXPLORATION COMPANY
PRO FORMA COMBINED FINANCIAL STATEMENTS (Unaudited)
The accompanying unaudited pro forma combined statement of income for the
year ended December 31, 1999 includes pro forma acquisition adjustments that
give effect to the acquisition of the Acquired Properties as if such
acquisition had been completed on January 1, 1999. The accompanying unaudited
pro forma combined balance sheet as of December 31, 1999 includes the
acquisition of the Acquired Properties as if such acquisition had occurred on
December 31, 1999.
The unaudited pro forma combined financial statements are based on the
assumptions set forth in the notes to such statements. Such pro forma
information should be read in conjunction with the Company's financial
statements and related notes thereto and is not necessarily indicative of the
results that actually would have occurred had the transactions been in effect
on the dates or for the periods indicated, or of results that may occur in
the future.
F-7
12
NEWFIELD EXPLORATION COMPANY
PRO FORMA COMBINED STATEMENT OF INCOME (Unaudited)
(In thousands, except share and per share data)
Year Ended December 31, 1999
---------------------------------------------------------
Pro Forma Adjustments
------------------------
Acquired Other
Historical Properties Adjustments Pro Forma
----------- ---------- ----------- ----------
Oil and gas revenues. . . . . . . . . . . . . $281,967 $29,444 (A) $311,411
Operating expenses:
Lease operating . . . . . . . . . . . . . . . 47,776 3,998 (A) 51,774
Depreciation, depletion and amortization. . . 152,644 $16,981 (B) 169,625
General and administrative (exclusive of
stock compensation) . . . . . . . . . . . . 14,405 14,405
Stock compensation. . . . . . . . . . . . . . 1,999 1,999
------- ------ -------
Total operating expenses. . . . . . . . . . . 216,824 3,998 237,803
------- ------ -------
Income from operations. . . . . . . . . . . . 65,143 25,446 73,608
Other income (expenses) . . . . . . . . . . . (13,128) (6,140) (C) (19,268)
------- -------
Income before income taxes. . . . . . . . . . 52,015 54,340
Income tax provision. . . . . . . . . . . . . 18,811 814 (D) 19,625
------- -------
Net income. . . . . . . . . . . . . . . . . . $ 33,204 $ 34,715
======= =======
Basic earning per common share. . . . . . . . $0.81 $0.84
===== =====
Diluted earning per common share. . . . . . . $0.79 $0.82
===== =====
Weighted average number of shares
outstanding for basic earnings per share . . 41,194,021 41,194,021
========== ==========
Weighted average number of shares
outstanding for diluted earnings per share . 42,293,865 42,293,865
========== ==========
The accompanying notes are an integral part of the unaudited pro forma
consolidated financial statements.
F-8
13
NEWFIELD EXPLORATION COMPANY
PRO FORMA COMBINED BALANCE SHEET (Unaudited)
(In thousands, except share data)
December 31, 1999
-------------------------------------------
Pro Forma
Historical Adjustments Pro Forma
------------ ----------- ----------
ASSETS
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . $ 41,841 $(32,000) (E) $ 9,841
Accounts receivable - oil and gas. . . . . . . . . . 67,744 67,744
Inventories. . . . . . . . . . . . . . . . . . . . . 9,962 9,962
Other current assets . . . . . . . . . . . . . . . . 6,382 6,382
--------- ------- ---------
Total current assets. . . . . . . . . . . . . . . 125,929 (32,000) 93,929
--------- ------- ---------
Oil and gas properties (full cost method). . . . . . . 1,210,895 142,000 (E) 1,352,895
Less - accumulated depreciation,
depletion and amortization. . . . . . . . . . . (566,053) (566,053)
--------- ------- ---------
644,842 142,000 786,842
--------- ------- ---------
Furniture, fixtures and equipment, net . . . . . . . . 3,369 3,369
Other assets . . . . . . . . . . . . . . . . . . . . . 7,421 7,421
--------- ------- ---------
Total assets. . . . . . . . . . . . . . . . . . . $ 781,561 $110,000 $ 891,561
========= ======= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities . . . . . . $ 88,670 $ 88,670
Advances from joint owners . . . . . . . . . . . . . 2,057 2,057
--------- ---------
Total current liabilities . . . . . . . . . . . . 90,727 90,727
--------- ---------
Other liabilities. . . . . . . . . . . . . . . . . . . 10,586 10,586
Long-term debt . . . . . . . . . . . . . . . . . . . . 124,679 $110,000 (E) 234,679
Deferred taxes . . . . . . . . . . . . . . . . . . . . 36,801 36,801
--------- ------- ---------
Total long-term liabilities . . . . . . . . . . . 172,066 110,000 282,066
--------- ------- ---------
Company - obligated, mandatorily redeemable,
convertible preferred securities of Newfield
Financial Trust I . . . . . . . . . . . . . . . . . . 143,750 143,750
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock ($0.01 par value,
5,000,000 shares authorized; no shares issued). . --- ---
Common stock ($0.01 par value, 100,000,000
shares authorized; 41,734,884 shares issued
and outstanding). . . . . . . . . . . . . . . . . 417 417
Additional paid-in capital. . . . . . . . . . . . . 267,352 267,352
Unearned compensation . . . . . . . . . . . . . . . (3,685) (3,685)
Accumulated other comprehensive loss - foreign
currency translation adjustment . . . . . . . . . (179) (179)
Retained earnings . . . . . . . . . . . . . . . . . 111,113 111,113
-------- --------
Total stockholders' equity. . . . . . . . . . . . 375,018 375,018
-------- ------- --------
Total liabilities and stockholders' equity. . . . $ 781,561 $110,000 $ 891,561
======== ======= ========
The accompanying notes are an integral part of the unaudited pro forma
consolidated financial statements.
F-9
14
NEWFIELD EXPLORATION COMPANY
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (Unaudited)
The pro forma adjustments are described as follows:
(A) Reflects the recognition of revenues and direct operating expenses of
the Acquired Properties for the year ended December 31, 1999.
(B) Reflects additional estimated depreciation, depletion and
amortization attributable to the acquisition as if such acquisition had
occurred on January 1, 1999. The additional depreciation, depletion
and amortization was calculated on the unit-of-production method based
on pro forma capitalized costs and estimated future development,
dismantlement and abandonment costs and estimates of total pro forma
proved reserves.
(C) Reflects increased interest expense of $8.2 million (less capitalized
interest of $1.5 million for the portion of the purchase price
allocated to unproved properties) as if the Company incurred borrowings
of approximately $110 million under its credit facility to fund a
portion of the purchase price. The applicable interest rate on the
credit facility was 6.94% at December 31, 1999.
A 1/8 percent increase in the assumed interest rate would result in an
increase in total pro forma interest expense of approximately $138,000.
(D) Reflects pro forma income tax provision, assuming a 35 percent rate,
based on the pro forma change in net pre-tax income.
(E) Reflects borrowings under the Company's credit facility of
approximately $110 million and the application of the proceeds
therefrom and the use of approximately $32 million of cash for the
acquisition of interests in three producing gas fields in South Texas for
total consideration of $142 million.
The consideration to be paid has not been reduced by the net cash flows from
the properties for the period from January 1, 2000 to February 25, 2000,
which will be treated as a reduction in the purchase price.
F-10
15
NEWFIELD EXPLORATION COMPANY
PRO FORMA COMBINED SUPPLEMENTARY OIL AND GAS DISCLOSURES (Unaudited)
The following pro forma estimated reserve quantities show the effect of the
acquisition of the Acquired Properties:
Acquired
Historical Properties Pro Forma
---------- ---------- ---------
December 31, 1999:
Proved:
Oil and condensate (MBbls). . . . . . . . . . . 25,770 1,448 27,218
Gas (MMcf). . . . . . . . . . . . . . . . . . . 440,173 104,648 544,821
Proved developed:
Oil and condensate (MBbls). . . . . . . . . . . 23,256 746 24,002
Gas (MMcf). . . . . . . . . . . . . . . . . . . 376,820 48,873 425,693
F-11
16
NEWFIELD EXPLORATION COMPANY
PRO FORMA COMBINED SUPPLEMENTARY OIL AND GAS DISCLOSURES (Unaudited)
The following pro forma estimated standardized measure of discounted future
net cash flows shows the effect of the acquisition of the Acquired
Properties:
Acquired
Historical Properties Pro Forma
----------- ----------- ----------
(in thousands of dollars)
December 31, 1999:
Future cash inflows. . . . . . . . . . . . . . . . $1,708,520 $287,532 $1,996,052
Less related future:
Production costs . . . . . . . . . . . . . . . (334,262) (27,024) (361,286)
Development and abandonment costs. . . . . . . (236,726) (33,483) (270,209)
---------- -------- ----------
Future net cash flows before income taxes. . . . . 1,137,532 227,025 1,364,557
10% annual discount for estimating timing of
cash flows. . . . . . . . . . . . . . . . . . . . (224,239) (76,775) (301,014)
---------- -------- ----------
Standardized measure of discounted future
net cash flows before income taxes. . . . . . . . 913,293 150,250 1,063,543
Future income tax expense, net of 10% annual
discount. . . . . . . . . . . . . . . . . . . . . (180,774) (19,695) (200,469)
---------- -------- ----------
Standardized measure of discounted future
net cash flows. . . . . . . . . . . . . . . . . . $ 732,519 $130,555 $ 863,074
========== ======== ==========
F-12